When you sell your home, you’ll have to understand a few issues associated with that sale. For one, you’ll have to settle with your mortgage lender in your home’s sale closing. Because of a mortgage loan’s due-on-sale clause, your lender can and will demand full payoff of its loan upon your home’s formal sale. But mortgage lenders typically don’t have to be educated when borrowers put up their homes for sale, just when they actually do sell.
Mortgages and Sales
Mortgage lenders receive several interests in the properties securing their loans, including due-on-sale rights. Basically, loan due-on-sale rights allow lenders to call their loans in when the properties securing them are transferred or sold. However, because your home’s name and deed holder you have the general right to market your home as you’d like. Of course, there are certain home sale scenarios, such as in short sales, where you’ll want to educate your lender and get its sale permission.
Short Sale Notifications
In a short sale, a home is offered for less than is owed on it. Unfortunately, it’s sometimes tough to acquire a mortgage lender’s permission to perform a short sale. Not informing your lender of your effort at a home short sale could make it just to transfer to a foreclosure to protect its interests. Outside of real short sales, though, so long as you make up your mortgage’s negative balance from your home’s sale closing your lender generally won’t care.
Informing Mortgage Lenders
In many cases, it’s a fantastic idea to tell your lender of your intended home sale if it’s not required. For one, you’re likely going to should know what your mortgage loan equilibrium is before selling your home. Informing your lender that you would like to market your home might aid it in giving you an accurate mortgage payoff sum. Whether you choose to share with your mortgage loan’s payoff sum with your real estate agent is up to you.
Home Sale Notifications
At minimum, you’ll be informing your mortgage lender once you accept a purchase offer on your home. Your house’s name can not be legally transferred to its buyer if there are no liens on it. A mortgage loan is a lien on your home’s name and will have to be cleared before sale closing. Once you sell your home a designated settlement agent will obtain your mortgage’s loan balance and arrange for its payoff from your sale proceeds.